Mortgage Guide - Finding a mortgage that's right for you - Mortgages - Skipton Building Society
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Mortgages Mortgage Guide Finding a mortgage that’s right for you
Skipton Building Society is here to help you, whether you’re thinking of buying your first home, buying an investment property, looking to move or considering remortgaging. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. IF YOU HAVE A BUY TO LET MORTGAGE AND YOU FAIL TO KEEP UP WITH PAYMENTS ON YOUR MORTGAGE, A ‘RECEIVER OF RENT’ MAY BE APPOINTED AND/OR YOUR RENTAL PROPERTY MAY BE REPOSSESSED.
Contents Part 1 General mortgage information page 4 Practical help from Skipton page 5 The different types of mortgage products page 6 What mortgage is right for you? page 9 Valuing the property page 11 Repayment methods page 13 Part 2 3 More about Skipton products and services page 16 How much could you borrow? page 16 Foreign currency loans page page 17 Understanding your mortgage costs page 18 Other Skipton benefits explained page 20 Protecting your home page 21 Other information to consider page 22 The Skipton mortgage interview process page 24 What to do if in payment difficulties page 25 Jargon buster page 27
Part 1 – General mortgage
information
Most of us would like to own a property, which usually means having to take out a
mortgage.
Choosing the right mortgage can be confusing because there are so many lenders
and so many different types of mortgage. On top of this, the house buying process
can seem daunting, particularly if you are buying a home for the first time.
Your mortgage is likely to be one of the largest financial commitments of your life,
so it’s important that you get a mortgage that’s right for you. Help is at hand from
Skipton Building Society – with a wide range of mortgage options, our qualified
mortgage advisers could help you find one from our range that’s right for you.
It’s also important that you fully understand the implications of your financial and
legal commitments, especially in terms of the mortgage you are taking and how
much you will be paying.
4Part 1 – General mortgage information
Practical help from Skipton
We want to help you get the most out of your money. This includes checking your
affordability, advising you on your mortgage application and supporting you when
you’re looking to:
• buy your first home
• move home
• buy an investment property
• remortgage to us from another lender
• take out Additional Borrowing or make changes to your mortgage
(for existing borrowers).
We don’t believe in jargon and over-complicated financial terms. What we do
believe in is listening to your priorities, taking you through the process step by step,
explaining things in plain English, all in a relaxed, no pressure environment.
We’re the UK’s 4th largest building society and, as a mutual, our members always
come first.
How to apply for a new mortgage
5
You can start your application for a mortgage over the phone, by contacting
us on 0345 607 9825. One of our mortgage team can then carry out an initial
affordability check and provide a Decision in Principle (DIP) in under 10 minutes.
If your DIP is approved, you will be able to arrange a full mortgage appointment
over the phone or by video call, with our qualified mortgage advisers, who will be
able to identify whether we have a mortgage to suit your personal circumstances.
We provide an advised mortgage service, which includes advice and
recommendations. An adviser will take all the necessary information and make
recommendations to suit your needs.Part 1 – General mortgage information
Help every step of the way
Once your mortgage application is in progress, you will find that we continue to
provide the same level of care and attention that we did when you started your
application. We want to make sure that your purchase, remortgage, Additional
Borrowing or changes to your mortgage proceed in a way that is easy and as
problem free as possible.
These steps include:
• gathering information about your needs
• an efficient application process
• quick decisions.
We will continue to provide help when you need it. You can also access a wide
range of information online at skipton.co.uk/mortgages.
The different types
6
of mortgage products
There are many different types of mortgages available.
From time to time Skipton will offer all or some of the mortgage types described in
this leaflet. All of our mortgages come with a number of additional benefits, which
are highlighted in the section ‘Other Skipton benefits explained’ on page 20. Our
mortgage team will be happy to help if there’s any further information you need. You
can contact them on 0345 850 1755.
In general, there are the following types of mortgages:
• discounted
• cashback
• fixed
• tracker.
The next section describes how these different mortgages work. Please make sure
you read page 9, which details what rate your mortgage would change to at the end
of the product deal.Part 1 – General mortgage information Fixed rate mortgages With a fixed rate mortgage, the monthly interest rate will stay the same for a set period of time, typically two, five or ten years. At the end of the fixed rate period, your rate will usually change to a variable rate. Your payment will be the same every month for the duration of the fixed rate term, even if other interest rates rise during this period. This can help you to budget for the whole period, because you’ll know how much money to put aside to cover your mortgage payments each month. If interest rates fall during the fixed period, the amount you pay during the fixed rate period will not change, so you may end up paying a higher rate of interest than if you were on a variable rate mortgage. Discounted rate mortgages Your payments are based on a discounted rate, which is set at a certain level below a lender’s variable rate for a specific period of time. As the lender’s rate is variable, this means that your rate and payments could go up and down during the discounted period. For example, a 1% discount for 12 months off a lender’s variable rate of 5% would mean you pay a rate of 4% variable for 12 months. Sometimes these discounts are stepped over a period of time, for example, a 7 discount of 2% in year one followed by a discount of 1% in year two. At the end of the discount period, your rate will usually be changed to a lender’s variable rate. This type of mortgage provides you with lower payments in the early years, which can help with the cost of moving or setting up in your new home. Cashback From time to time, Skipton may offer products that include an element of cashback. If your product has cashback, it will be paid following completion of your mortgage, into the same account from which the Direct Debits for your mortgage payments will be taken.
Part 1 – General mortgage information
Tracker mortgages
With a tracker mortgage, your interest rate is directly linked to an independent
rate, such as the Bank of England Base Rate (BoEBR) for a set period of time. For
example, your rate may be 1.5% above the BoEBR for a period of three years.
Your rate will reflect the independent rate being tracked. This means when the
independent rate increases, so will your rate. But if the independent rate falls, you
will benefit from the reduction in full during the tracker period. There may be a short
delay between the change to the independent rate and that of the mortgage. The
timing will normally be set out in the terms and conditions of the mortgage. These
changes also affect monthly payments. Some products have floors, below which
the interest rate cannot fall.
Further details
For further details of our current products, visit skipton.co.uk. Before you apply for
your mortgage we will provide you with a personalised Mortgage Illustration (MIL),
with full product terms and conditions, including details of your mortgage payments
for the loan requested.
8Part 1 – General mortgage information
What mortgage is right
for you?
When reviewing different types of mortgages, we believe it is important that
you consider the whole deal. You need to pay particular attention to what you
will be paying during, and at the end of, the initial product period, because your
payments may increase.
For example, if interest rates have risen sharply during your initial product period
and remain high, your mortgage payments could be significantly higher when
your initial product period ends – making it more difficult for you to afford the
monthly payments. Our mortgage advisers will talk you through this and will look at
affordability after the product deal ends too.
Interest rates when Skipton product deals end
The three main variable rates our product deals move on to are: our Standard
Variable Rate (SVR), our Base Rate Tracker (BRT) or our Mortgage Variable Rate
(MVR). These rates may change by different amounts at different times. The rate
you move on to depends on when you applied for your product deal and will be 9
shown on your mortgage offer. Details of the three rates, including the ceiling on the
SVR (SVR Ceiling), appear in the table below. The rates shown in this table were last
set on 1 May 2020.
Separate SVRs and MVRs exist for both Residential and Buy to Let mortgages, and
may change by different amounts at different times.
SVR BRT MVR
(Residential or Buy to Let) (Residential or Buy to Let) (Residential) (Buy to Let)
Current 4.60% (variable) 4.85% (variable) 4.64% 4.84%
rate: Set by Skipton Building Society Tracks Bank of England (variable). (variable).
from time to time. Base Rate + 4.75%.
Relates only Before On or after On or after
to product 30 December 2009. 30 December 2009, but 14 November 2012.
deals applied before 14 November
for: 2012.
Ceiling: Guaranteed not to be more None. None.
than 3% above BoEBR unless If the SVR Ceiling is If the SVR Ceiling is
exceptional circumstances apply reinstated, it will not apply reinstated, it will not apply
(SVR Ceiling). to BRT products. to MVR products.
The SVR Ceiling currently does
not apply due to exceptional
circumstances, but will be
reinstated if exceptional
circumstances cease.
Notes
(1) Rates quoted currently include a Direct Debit discount of 0.25%. Where payments are not made by Direct Debit, the rate will be 0.25% higher.
(2) Rates quoted may be subject to any product ceilings or floors in place – any such ceilings or floors will be detailed in your mortgage offer.
(3) Exceptional circumstances apply when either the base rate is less than, or equal to, 2.7%, or the base rate minus the UK average instant access
savings rate (as published by the Bank of England) is less, or equal to, 2.25% for each of the three preceding months. The circumstances will remain
exceptional for as long as either one of these tests continue to be satisfied.Part 1 – General mortgage information
Product deals on Additional Borrowing, porting and switching applied
for on, or after, 14 November 2012
Additional Borrowing – where you borrow more money on top of your existing
mortgage.
Additional Borrowing applied for on or after 14 November 2012, moves on to MVR
at the end of any product deal period, even if your existing product(s) are on, or will
move on to, SVR or BRT. Your Additional Borrowing will not benefit from the SVR
Ceiling, if it is reinstated.
Porting – where you transfer your existing mortgage product(s) to a
new property.
If your existing product is on, or will move on to SVR or BRT, any ability to port that
mortgage enables you to port the same rate to your new property, even after 14
November 2012 (subject to underwriting criteria including affordability, at the time
of porting the product/rate, the property itself and the purpose of the loan). If, on
or after 14 November 2012, you apply to port and take out Additional Borrowing
above the balance of your existing mortgage, that Additional Borrowing will move
on to MVR at the end of any product deal period. This Additional Borrowing will not
benefit from the SVR Ceiling, if it is reinstated.
10
Rate switch – where you move from your existing product to a new product
without moving home.
ince 14 November 2012, you can only switch to a product which moves onto MVR
S
at the end of any product deal period. If your existing product is on, or will move on
to, SVR or BRT and you switch, you will not be able to switch back later to SVR or
BRT. The new product will not benefit from the SVR Ceiling, if it is reinstated.
If you have any questions about this and how it relates to your mortgage, please
contact us on 0345 850 1755.
Mix and match options
With Skipton, you can have more than one product to suit your personal
requirements. Please note that in such cases, the highest product fee on the
products chosen will apply.Part 1 – General mortgage information Valuing the property Before making a formal mortgage offer, we make an assessment of the value of the property, and may need to obtain a valuation for mortgage purposes to check that the property is worth the agreed price and is suitable to lend against. Where a physical valuation is required for mortgage purposes, the cost will depend on the value of the property. We may ask you to pay towards this standard mortgage valuation. In some instances we may use Automated Valuation Models (AVMs) to assess the value of the property or a Desktop valuation, where a surveyor does an online assessment but doesn’t need to physically view the property. In these instances we won’t charge you a fee. There are three levels of physical survey: Standard mortgage valuation – this is carried out on behalf of the mortgage lender and is only designed for our mortgage purposes. It is not a survey and it doesn’t guarantee that the property is free from defects. Skipton instructs only standard mortgage valuations, but there is no charge to customers for a valuation for mortgage purposes where the property is worth less than £1.5 million. Homebuyer report – this is intended to provide an overview on the general 11 condition of the property. Generally, a surface examination of the parts of the property that are visible and readily accessible is carried out, and services are inspected but not tested. This report is instructed by you and is your report. Building survey – this is also known as a full structural survey and will give you a review of the property’s structure and pinpoint any defects. Building surveys tend to be carried out on older properties, listed buildings or buildings that have unusual constructions. Occasionally, if the mortgage valuation flags a potential structural problem, the lender may require additional reports to confirm, for instance, structural soundness and these should be arranged directly with a valuation firm. If any of these surveys reveal problems, you may want to get a builder or other expert to assess what the repairs would cost, and use this as a basis for negotiating a lower price with the seller. If you are in any doubt about the suitability of the property, it would be worthwhile opting for a more detailed report. The additional costs are payable to the valuer and you should arrange this directly with the valuer. Scottish Surveys Scotland sellers are required to obtain a Home Report. Lenders will accept a Transcription of the Home Report in most circumstances. Where these aren’t acceptable a new Home Report will be instructed.
Part 1 – General mortgage information
Energy Performance Certificates (EPCs)
An EPC, which reports on the energy efficiency of a property, is provided by the
seller or their agent. The seller or their agent must have requested an EPC before
marketing the property and an EPC must be provided by the exchange of contracts
at the latest. The seller will still be required to pay for the EPC and every effort
should be made to receive it within 28 days. There will be fixed penalties for those
failing to comply with their duties. It will not form part of any valuation report.
12Part 1 – General mortgage information
Repayment methods
You will need to have paid off your mortgage by the end of the term. It is important
for you to understand that your mortgage is made up of two main components:
The capital sum (the amount you borrow to buy your home)
he amount of interest due on the capital sum over the term of the mortgage,
T
for example, 25 years.
Repayment (capital and interest)
Your monthly payments cover both the repayment of the capital sum borrowed and
the interest due on your loan. This way, you gradually pay off the full amount of your
mortgage over the term. In the early years, your payments will be geared more to
paying off the interest, while in later years, most of your payments will be repaying
the capital sum.
As long as you make all the monthly payments in full and on time, and pay any fees,
you can be certain that the whole loan will be repaid by the end of the term.
Interest-only
With an interest-only loan, your monthly payments cover only the interest due on 13
your loan. As you will only pay the interest, your monthly payments will be lower
compared to the repayment method (capital and interest), but you will also need
to take into account the cost of repaying the capital sum at the end of the
mortgage term.
By taking the interest-only option, your mortgage balance will not decrease, so
there will be more interest overall to be paid, compared to the repayment method.
Interest-only repayment strategy
We will only enter into a mortgage contract where all or part of the contract is on an
interest-only basis if:
y ou can provide evidence that a clearly understood and credible repayment
strategy is in place, and it meets with our criteria.
s far as it is reasonably able to assess at the time of underwriting, your
a
repayment strategy has the potential to repay the capital borrowed.
We will not lend to first time buyers on an interest-only basis and have restrictions
on the level of loan-to-value which can be taken on interest-only, along with
different minimum income requirements.Part 1 – General mortgage information
We accept two types of repayment strategies:
An endowment policy provided by a regulated firm
The latest annual statement must be provided as evidence that the sum due to be
paid on maturity, based on the ‘medium’ projection, is equal to, or in excess of, the
proposed amount of mortgage borrowing. The policy is not held with Skipton.
Defined types of assets
Evidence must confirm that the value of your assets at the time of underwriting is
equal to, or in excess of, the proposed amount of mortgage borrowing.
Acceptable assets are:
Equity in a UK property. Where the main residence is being used as the
repayment vehicle, the maximum loan-to-value for the interest-only element is
50%, and a minimum of £300,000 of equity must be remaining in the property.
Where the overall loan is above 50% loan-to-value additional repayment
vehicles can be used in conjunction with the sale of the mortgaged property*.
Pension. Up to a maximum of 15% of the member’s total projected pension pot
is permitted, where the minimum projected value of the pension pot is
£400,000**.
14 UK shares and bonds held as investments (includes sharesave schemes and
premium bonds).
Cash savings in a UK deposit account***.
* Buy to Lets owned in the applicant’s name are acceptable. Buy to Lets owned
in a company name are not acceptable. Equity in commercial property is not
acceptable.
** Pension cannot be used as an acceptable repayment strategy, if used as
part of Skipton’s affordability calculation or as part of Skipton’s lending into
retirement policy.
*** Savings must be personal and not business related.
You must be aware that the value of investment can go down as well as up and
cannot be guaranteed on maturity. It is your responsibility to make sure you have
enough money to repay the loan at the end of its term.
You should regularly review your repayment strategy to ensure it is on track to
repay your mortgage.
Policy information correct at 11/12/2020.Length of mortgage term
Traditionally a mortgage might be expected to last 25 years but, dependent on your
personal circumstances, it could be more appropriate for you to take a shorter term
– or even a longer one. For example, a shorter mortgage term of say 15 or 20 years
may be worth considering, if you can afford it. A longer term would enable you to
reduce your monthly payments. Your payments will be higher if your term is shorter,
but this may substantially reduce the amount of interest you pay on the loan.
You also need to consider the length of the term in relation to your retirement,
when your income is likely to reduce. This may impact on the term of the mortgage
that would be available. For home purchases and remortgages, we will make
recommendations on this. For Buy to Let, we will discuss the options available to you.
15Part 2 – Skipton products and services
Part 2 – More about Skipton
products and services
This section provides you with further details about the products and services we
offer, as well as highlighting some of the other costs that you need to consider,
which may be forgotten in the excitement of buying a property.
You will find tools to compare your current income and future expenditure, which
will in turn help both you and your mortgage adviser determine the mortgage
payments that you can realistically afford.
In addition, we outline a number of other benefits that our mortgages incorporate,
such as flexibility. We explain the different options open to you for protecting your
home, and guide you through some of the confusing mortgage jargon that you may
come across.
How much could
you borrow?
16
If you are buying a property you will usually need a deposit of a minimum of 5% to
15% of the property value, although this may be different for some lenders from
time-to-time. The amount you could borrow from Skipton Building Society will be
assessed by a member of Skipton Direct, our telephone-based team.
Bear in mind, you will also need to budget for a number of one-off costs at the time
of your purchase. These costs could include:
valuation fee(s)
local authority search fee
solicitor’s or licensed conveyancer’s legal costs
Stamp Duty Land Tax (Land and Buildings Transaction Tax in Scotland or Land
Transaction Tax in Wales)
estate agent costs.Part 2 – Skipton products and services
Key household items such as:
appliances
furniture
carpets/curtains
decorating materials.
If you are looking to remortgage, costs that may be payable could include early
repayment charges and mortgage exit administration fees associated with your
current mortgage.
You should also think about the impact any lifestyle changes or increases in the
cost of living will have.
What you can afford now and in the future
The amount we actually lend is based on an overall assessment of affordability,
which takes into account your income, your expenditure and how you could
manage future interest rate rises.
NB: Please be aware that our lending policy may vary from time-to-time and our
mortgage products can be withdrawn at short notice. Any mortgage offer we
make will normally be valid for six months and not always transferable to different
17
properties, should your intended purchase not proceed. Some limited edition
products may be subject to different terms.
We also have criteria for the type of properties we lend on. You should discuss our
criteria with your mortgage adviser.
Foreign currency loans
A foreign currency loan is a loan for residents outside the UK or UK residents who
intend to repay their mortgage using assets or income which are in a currency other
than sterling. Like a number of other lenders, we do not offer any form of new or
additional lending (including porting of products to a new property or changes of
ownership to your property), which are foreign currency loans. The foreign
currency rules do not affect you if there is any future product switch or other
contract variation such as changes to the term of your mortgage or your method
of repayment.Part 2 – Skipton products and services
Understanding your
mortgage costs
Below are some of the costs associated with a mortgage application that you
need to be aware of. Full details of individual mortgage related charges that apply
to your loan will be included in your MIL. Our ‘Tariff of Mortgage Charges’ leaflet
shows other charges that may apply. The leaflet is available on request and will be
included with any mortgage offer made. It is also available at skipton.co.uk.
Application fee
This is an arrangement charge payable upon application. This fee is non-refundable
and may vary between products.
Completion fee
This covers our work in setting up the mortgage when the money to buy your new
home is released to the seller, or when your remortgage completes. Your mortgage
adviser will discuss with you whether you wish to add this fee to your loan on
completion. To avoid incurring interest, you can elect to pay it up front.
18
This fee is product specific and may vary between different mortgage deals.
Valuation fee
A report will be required to establish the value of the property for mortgage
purposes. You may be required to pay for this. We will require this report before
making a formal mortgage offer. This report is for the lender’s purposes only. For
purchases, we will provide you with a copy of the report.
If you’re purchasing a property, a standard mortgage valuation alone may not be
suitable for your needs. A homebuyer report or building survey may be required.
Full details of the different surveys are available on page 11.
Fund transfer fee
We send the mortgage monies to your conveyancer by electronic transfer and there
is a charge of £6, which you can debit to the account on completion or, to avoid
incurring interest, you can pay up front.Part 2 – Skipton products and services
Higher Lending Charge (HLC)
If you are borrowing a high percentage of the valuation or purchase price of the
property, many lenders charge you a HLC, Skipton do not administer this charge.
This is to provide your lender with possession and sold for less than you owe.
This charge is normally made on borrowing that exceeds 75% of the valuation or
purchase price, although some lenders will pay this on a customer’s behalf.
The HLC is designed to protect the lender, but it does not protect you individually.
You will remain liable to pay all the money owing, including arrears, interest and our
legal fees. If a claim is paid to your lender under third party insurance, paid for out
of the HLC, the insurers will normally have the right to recover the amount from you.
Deposit
You will need to find the difference between the amount you are borrowing and the
price of the property. This is likely to be the biggest expense for first time buyers.
Buyers already on the property ladder who have a house to sell at the same time,
can often use some of the equity built-up in the house being sold.
Conveyancing costs
You will need to employ a conveyancer (solicitor or licensed conveyancer) to handle 19
the legal aspects of buying your home if this is with the aid of a mortgage, or to
remortgage. The conveyancer usually acts for you and the lender.
The costs your conveyancer deals with on a purchase, which you will be required to
pay, include:
tamp Duty Land Tax – a tiered government tax on the price you pay for your
S
home (Land and Buildings Transaction Tax in Scotland or Land Transaction Tax
in Wales).
Search costs – the cost for carrying out searches on your behalf, such as with
the Local Authority and Land Registry.
Your solicitor or licensed conveyancer will also charge you for the work they carry
out such as:
dealing with enquiries
drafting contract for sale/reviewing contract on purchase
arranging completion/preparing the document which transfers legal ownership.
These costs will not be included in your MIL.
When remortgaging, many lenders will cover the costs of standard conveyancing.
Please see page 20 for details of the Skipton Remortgage Conveyancing Service.Part 2 – Skipton products and services
Other Skipton
benefits explained
Flexibility
Skipton mortgages offer you scope to increase your payments to suit your ability to
overpay. Your mortgage adviser can explain the implications of this.
Daily interest
We calculate your mortgage interest on a daily basis. This means that every time
you make a payment of any size, the amount on which interest is calculated is
immediately reduced. This could save you hundreds, even thousands of pounds
over the life of your mortgage if you make overpayments.
Overpayments
You can make overpayments over and above your regular contracted monthly
payment at any time. By making regular overpayments of even a modest amount,
you could significantly reduce your mortgage term and save yourself thousands of
20 pounds as a result.
Some of our mortgage deals may include early repayment charges if overpayments
are made, so please discuss this with your adviser if it’s a benefit you would like to
take advantage of.
If you are making lump sum overpayments, these may trigger a recalculation of your
monthly repayment amount.
Payment holidays
Your Skipton mortgage allows you to take payment holidays once you have had
your mortgage with us for six months and if you have previously overpaid. You will
need our prior agreement. As long as you have had no arrears, the holiday proposed
would not take the loan-to-value above 95% and you have made sufficient surplus
payments to cover the holiday, you may take up to three consecutive months’ holiday.
You cannot take more than a total of six months in any 12 month period. Of course,
whilst you do not need to make payments during the holiday, interest will continue to
be added to your account and your balance will increase.Part 2 – Skipton products and services
Cashback
From time-to-time, Skipton may offer products that include an element of
cashback. If your product has cashback, it will be paid into the bank or building
society account from which your monthly Direct Debit mortgage payment is
collected following completion of your mortgage.
Skipton Remortgage Conveyancing Service
Seeking legal help when you are remortgaging is essential. At Skipton, we offer
our Skipton Remortgage Conveyancing Service for some of our products if you’re
remortgaging. Here’s how the service could help you:
we instruct the conveyancer to act on our behalf, but it’s free to you. The
instructed conveyancer acts on the Society’s behalf for the standard legal
work, although you will be contacted by our conveyancer during the
remortgage process by post, phone or email and invited to log on to the
conveyancing portal to submit the required information to the conveyancer and
track the progression of the remortgage.
if you’re moving mortgages but not moving home and your product offers free
standard legal fees, we’ll pay the standard legal costs so it’ll be free to you.
Please be aware that legal work relating to certain matters not usually involved in 21
a standard remortgage is not included in this offer, for example, transfers of equity,
Additional Borrowing applications or deeds of postponement. The conveyancers
will offer fixed prices for certain ‘elevated services’– please ask your mortgage
adviser for further details.
Your title documents
With the exception of Scotland and Northern Ireland, Skipton does not hold
packets of title documents. We will ask your conveyancer to return any deeds
and documents to you after your mortgage completes.
Protecting your home
You must have a buildings insurance policy in place to cover your property in order
to take a mortgage with Skipton. While you need to have valid buildings insurance
in place, this need not be through Skipton.
Skipton’s buildings insurance will cover you for loss or damage to the structure of
your home (including its garages and outbuildings) against insured events. Subject
to terms and conditions.Part 2 – Skipton products and services
Skipton Home Insurance is underwritten by Fairmead Insurance Limited (renamed
from Legal & General Insurance Limited), part of the Liverpool Victoria General
Insurance Group.
Skipton Building Society Home Insurance Protect and Protect Plus are underwritten
by Fairmead Insurance Limited (renamed from Legal & General Insurance Limited),
part of the Liverpool Victoria General Insurance Group. Fairmead Insurance Limited
is authorised by the Prudential Regulation Authority and regulated by the Financial
Conduct Authority and the Prudential Regulation Authority. Financial Services
Register number 202050. Registered in England and Wales Number 00423930.
Registered office: 57 Ladymead, Guildford, Surrey, GU1 1DB.
Other information to
consider
Early Repayment Charges – what they are and how they work
An Early Repayment Charge (ERC) may be due if you pay back all or part of your
22 loan, over and above your contracted monthly payments within the product deal’s
period, or if you choose to switch products before the product deal ends.
Most of our residential mortgages allow you to repay up to 10% of the original
loan each year, without charge, even those where an ERC is normally payable. This
allowance does not apply when you pay the remortgage in full.
Any charge that is made is calculated as a percentage of the amount repaid.
Please refer to your ‘Mortgage Illustration (MIL)’ and ‘Mortgage Offer’ document for
full details of any ERCs which may apply.
Product switch fee (pre-completion)
If Skipton’s mortgage rates change during the mortgage application process,
and you wish to change your product on to one of these new rates before your
mortgage completes, you will be required to pay a product switch fee. This fee will
be payable prior to the change in product and is charged in addition to any other
product fees payable at application and/or completion. The fee covers treasury
and administrative costs incurred by Skipton. Details of this fee can be found in our
‘Tariff of Mortgage Charges’ document.Part 2 – Skipton products and services
If you move house
Skipton mortgage products may be ‘portable’. This means you can transfer your
product to the mortgage on your new home. You will not be charged an ERC for that
product, as long as you complete your new mortgage and repay your old one at the
same time. Alternatively, you have up to six months to have the ERC refunded. If the
balance of the loan is reduced when you move, you might have to pay an ERC on the
reduction. Of course, both you and your new property must fulfil Skipton’s lending
criteria at the time of your move in order for a new mortgage to be approved.
Subject to lending criteria, you can also ‘top up’ the amount of your loan on another
product. See Additional Borrowing on page 24 for more detail.
APRCs
APRC stands for Annual Percentage Rate of Charge, which is the overall cost of
your mortgage expressed in a standardised way. This helps you compare the cost
of different loans over the whole term. It may seem obvious, but a loan with a lower
APRC is cheaper overall than a loan with a higher APRC.
An APRC for each product is shown on skipton.co.uk to help explain the total
cost for comparison purposes. However, your MIL will include the APRC specific
to your own loan requirements, which may differ slightly from the APRC shown
on skipton.co.uk. 23
The APRC in the MIL takes into account, amongst other things:
the amount borrowed and the term of the loan
t he interest rate you pay (including the rate you pay after any initial product
period)
harges that you have to pay, such as application/completion fees, valuation
c
fees and mortgage exit fees
when and how often you have to pay the interest and charges
any higher lending charge.
It is important to be aware that APRCs are only a snapshot of the total cost of a
loan at a particular time. All the known information is included in the calculation,
such as the current levels of interest rates and charges. Any planned changes such
as the ending of incentive periods are then worked out over the term.
What APRCs cannot predict are changes in the variable rate throughout the term
and the effect of any other changes that might occur, such as overpayments.
Whilst using APRCs to compare the cost of different loans, don’t forget to consider
how much you will have to pay each month and whether you can afford that amount.Part 2 – Skipton products and services
Additional Borrowing - for existing mortgage customers
Many people have a wish list of things they’d like, such as an extension to their
property, a new kitchen or a new car. Others have more of a ‘to think about’ list for
things like university fees or even a place in the sun. Skipton’s Additional Borrowing
could be the key to making these things happen.
If you decide to apply for Additional Borrowing, you need the following
information available:
Details of your gross and net income
Details of your household monthly expenditure
etails of any household insurance, life insurance and family protection
D
insurance
Details of any other mortgages
Details of personal debt such as loans, credit cards, etc.
Once you have had a mortgage advice appointment, if you meet our lending criteria
and you decide to go ahead with applying for Additional Borrowing, your mortgage
adviser will explain what you will need to provide.
Please remember, any money we lend through Additional Borrowing will be
24 secured against your property and your overall mortgage balance and payments
will increase.
It’s worth considering whether other forms of borrowing may be more suitable for
your circumstances.
The Skipton mortgage
interview process
The Skipton mortgage interview process will go through all the initial details that
support your mortgage application to provide an indication of the decision. The
process can involve:
• calling a member of our telephone team, Skipton Direct, or going online to
skipton.co.uk where you will also be able to obtain an initial affordability check
and Decision in Principle (DIP).
• if your DIP is approved, we will arrange an appointment with a Skipton Direct
mortgage adviser who will work with you to establish which mortgage from our
range best suits your needs and make a recommendation.
• you will be asked a number of questions about your personal circumstancesPart 2 – Skipton products and services
(this information will be recorded in a ‘Customer Needs Questionnaire’ – CNQ)
and forms part of your application.
• a Mortgage Illustration (MIL) for the recommended product will be prepared for
you to consider.
• if you’re happy with the information provided in your MIL you can return your
application to be progressed and you’ll need to pay any required fees.
Your Skipton Direct mortgage adviser will tell you what documentation will be
required to support your application. These may include:
• fully completed and signed CNQ, which then becomes your application form
• latest full month’s bank statement showing credits from your employer and one
month’s debits to current lender (if applicable)
• latest one month’s pay slip
• latest P60 (if using additional income)
• latest two years’ finalised accounts/SA302 or accountant’s certificate
(self-employed only)
• a
pplication/valuation fee (as applicable) and any other fees if you have chosen
not to add them to your loan
• address/identity documents (see overleaf).
Proving your identity 25
There is a regulatory requirement for the society to verify all customer’s identity. This
may be done electronically and in some circumstances, we will require additional
identity documentation. See skipton.co.uk/identity for more information.
What to do if in
payment difficulties
If you can see a situation arising where you are unlikely to be able to make your
monthly mortgage repayments, are unable to make the payments on the agreed
monthly date or unable to make any payments, then it is most important that you
talk to us as soon as possible.
Call the Credit Management team on 0345 850 1766.
We will then work with you to see what can be done for the best – the earlier you
get in touch the better.
To obtain a free information leaflet on Skipton’s policy on treating customers in
arrears fairly, please contact the Credit Management team on 0345 850 1766 or go
online at skipton.co.uk/mortgages/mortgage-hub/payment-difficulties.Part 2 – Skipton products and services
Complaints procedure
We do our best to give you a very high standard or service but if we don’t meet
your expectations you can make a complaint. We make every effort to settle
complaints quickly and fairly. We follow an internal complaints procedure to resolve
any complaints. This has been designed to meet the requirements of the Financial
Conduct Authority and the Financial Ombudsman Service (FOS):
• We’ll try and resolve your complaint within three working days of receiving it.
• If we’re able to resolve it in this time, we’ll send you a written summary of the
resolution. This will confirm your complaint has been resolved.
• The summary will also remind you of your right to take your complaint to the FOS
if you subsequently feel dissatisfied with the outcome.
Sometimes we need more time to look into your complaint:
• If we can’t resolve it within three working days, we’ll send you a written
acknowledgement letter. This will be no later than five working days after
receiving notification of your complaint.
• A Customer Relations Consultant will get in touch with you so we can investigate
your complaint fully. We’ll try and resolve your complaint within four weeks. If it’s
going to take longer, we’ll let you know.
• We’ll send a final response letter within eight weeks of the initial receipt of your
26 complaint. We’ll also remind you that you have a right to take your complaint to
the FOS if you’re not satisfied with the outcome.
• In the unlikely event that we can’t give you a response within the eight week
period, you can refer your complaint to the FOS.
How the Financial Ombudsman Service (FOS) can help
The FOS is a free and independent service for consumers. You should refer the
matter as soon as possible after our final response, but within six months of the
date of our final response. Please note, there are certain types of complaint the FOS
can’t investigate or rule upon. You might want to contact the FOS to discuss your
complaint with them before taking it any further.
Whilst you can refer your complaint to the FOS at any time, they’ll need our consent
to investigate complaints where:
• we haven’t had the chance to put things right
• we haven’t exceeded the eight week timescale and haven’t yet issued our final
response letter.Part 2 – Skipton products and services
Contact details of the FOS are:
The Financial Ombudsman Service
Exchange Tower
London
0800 023 4567
financialombudsman.org.uk
Jargon buster
Additional Borrowing
Additional Borrowing is borrowing more money from your current lender. This is
secured on your property. Skipton does consider Additional Borrowing but only
where we hold a first legal mortgage.
Annual Percentage Rate of Charge (APRC)
An indicative guide to help you compare the cost of different mortgage deals, taking
account of interest rates payable (both during the initial product period and after)
27
and fees.
Bank of England base rate (BoEBR)
This is the rate which is set on a regular basis by the Monetary Policy Committee
(MPC) of the Bank of England and is the rate that it charges for its borrowing.
Completion
The point at which the money is released to remortgage your home or to buy your
new home. Your conveyancer will ensure that ownership is transferred to you,
enabling you to move. This is known as ‘settlement’ in Scotland.
Conclusion of missives
The point at which both buyer and seller are legally bound to the purchase
(Scotland only).
Consumer Buy to Let (CBTL)
This is a type of mortgage introduced specifically for consumers wanting to rent
out a property they or a family member has previously lived in, rather than a
professional landlord renting out the property for business reasons.Part 2 – Skipton products and services
Conveyance
The legal document which transfers ownership of unregistered freehold land, in
England and Wales.
Disbursements
The fees your solicitor has to pay to others on your behalf, for example, Stamp Duty
Land Tax, Land Registry fees, and search fees.
Electronic transfer
This is the method by which your mortgage advance is paid to your conveyancer.
Equity
The positive difference between the value of your property and the amount of any
outstanding loans secured against it i.e. the amount you own outright.
First legal mortgage (also known as a first charge mortgage)
This loan takes priority over any other borrowing secured on your property. If you
sell your property, the first legal mortgage will be paid off first.
28
Foreign currency lending
Lending where, at the start of a new contract, the customer isn’t a UK resident or
relies on income or assets that aren’t in pounds sterling to repay the mortgage. We
don’t offer foreign currency lending.
Interest-only (interest-only mortgage)
The monthly payments over the term of the mortgage cover only the interest
charged on the amount borrowed. This means the original amount borrowed
together with any fees or charges debited to your account will be owed in full at the
end of the term.
Lease
A document that grants the holder possession of a property for a fixed period
of time. It sets out the obligations of both the landlord and leaseholder, such as
payment for rent, repairs and insurance.
Loan (sometimes called the advance)
The amount of money we agree to lend you.Part 2 – Skipton products and services
Loan-to-value (LTV)
A percentage that shows how much of a property’s value you’re borrowing. If, for
example, you’re buying a property worth £100,000 and need to borrow £85,000, the
LTV is 85%. So you’d need a mortgage product that offered an LTV of at least 85%.
Missives
The formal written offer to buy the property and the written acceptance (Scotland
only).
Mortgage Illustration (MIL)
This document, or ones similar to it, must be provided to you by law. It shows
all the key information you need when choosing a mortgage and enables you to
compare mortgages from different lenders.
Part and part
This is a combination of both repayment and interest-only mortgage. For example,
a loan of £50,000 could be made up of £30,000 repayment and £20,000 interest
only, so there would be a remaining capital balance of £20,000 to repay at the end
of your mortgage term.
29
Porting
The process of transferring your existing Skipton mortgage product to a new
property. All of the terms and conditions of your mortgage product remain the
same, but the mortgage is moved on to the new property that you are purchasing.
When you port your mortgage you may require Additional Borrowing and for this
you may require an additional mortgage product.
Redemption Administration Fee (sometimes called a Mortgage Exit Fee)
A fee charged by the lender for releasing the legal charge over your property
following repayment of a mortgage.
Reflection period
A formal period of time that allows you to consider a mortgage offer. It doesn’t
affect how long your offer is valid for.
Remortgage
The process of moving your existing mortgage to a new lender without moving
home.Part 2 – Skipton products and services
Repayment (repayment mortgage)
Your payments cover the original amount borrowed plus any interest, together with
any fees or charges debited to your account.
Repayment strategy
This is the means by which you choose to pay off the capital on an interest-only
mortgage when the mortgage term comes to an end. You need to check with us to
make sure that your chosen repayment strategy is acceptable to us.
Searches
For example, enquiries made at the Land Registry, the Land Charges Register and
local authorities to check whether there is anything to cause concern about the
property.
Second (or Subsequent) Charge Lending
This is where a lender offers a loan secured on a property which, if your property is
sold, will be paid off after the first legal mortgage.
Subject to contract
30
A provisional agreement made between buyer and seller, before exchange of
contracts, which allows either side to back out without penalty (England and Wales
only).
Term
The length of time over which your mortgage loan is to be repaid.
Title
The legal right to ownership of a property.
Title deeds
The documents showing the ownership of property.
Transfer deed
The legal document which transfers ownership of registered land.
Transfer of equity
The adding or removal of a person to/from an existing mortgage account and
ownership of the property.Part 2 – Skipton products and services
Vendor/seller
The person(s) selling the property.
31Visit your local branch Call 0345 850 1755
Go to skipton.co.uk
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON
YOUR MORTGAGE. IF YOU HAVE A BUY TO LET MORTGAGE AND YOU FAIL TO
KEEP UP WITH PAYMENTS ON YOUR MORTGAGE, A ‘RECEIVER OF RENT’ MAY BE
APPOINTED AND/OR YOUR RENTAL PROPERTY MAY BE REPOSSESSED.
Call charges will vary. To help maintain service and quality, some telephone calls may
be recorded and monitored.
Skipton Building Society is a member of the Building Societies Association. Authorised by the
Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential
Regulation Authority, under registration number 153706, for accepting deposits, advising on and
arranging mortgages and providing Restricted financial advice. Principal Office, The Bailey, Skipton,
North Yorkshire BD23 1DN. Stock Code: 10-5627_317043_04/12/2021You can also read
